NEW YORK (Reuters) - U.S. mortgage rates fell in step with bond yields in the wake of weaker-than-expected domestic economic data and as investors scaled back expectations about interest rate increases by the Federal Reserve in 2017, according to Freddie Mac (FMCC.PK) on Thursday.
The borrowing cost on 30-year mortgages, the most widely held type of U.S. home loan, averaged 4.02 percent in the week ended May 18, down from 4.05 percent the previous week, the mortgage finance agency said.
Mortgage rates will likely fall next week as 10-year Treasury yields have declined on safe-haven demand for bonds due to concerns about potential delays in tax cuts and other fiscal stimulus amid probes into U.S. President Donald Trump’s 2016 campaign team and Russia.
On Thursday, the benchmark 10-year Treasury yield US10YT=RR fell to a one-month low at 2.18 percent as safety bids for U.S. government bonds grew on worries about a scandal around Brazilian President Michel Temer, spurring a rout in the Brazilian stock market .BVSP.
“The delayed impact of the associated decline in Treasury yields may push mortgage rates lower in next week’s survey,” Freddie Mac chief economist Sean Becketti said in a statement.
Reporting by Richard Leong; Editing by Bernadette Baum and Chizu Nomiyama